Downtrend intensifies in MCX-Nickel

The Nickel futures contract on the Multi Commodity Exchange (MCX) extended its fall in the past week as expected. The contract tested ₹990 per kg earlier in the past week and has tumbled over 5 per cent to make a low of ₹934 on Wednesday. However, it has managed to bounce from the low and is currently trading at ₹943 per kg.

The sharp fall over the last couple of weeks has dragged the contract well below the key ₹950-₹948 support region. This region will now act as a near-term resistance. Inability to breach ₹950 decisively could retain the downside pressure on the contract. As long as the contract remains below ₹950, a fall to ₹930 or ₹925 is possible in the coming days. A further break below ₹925 will then increase the likelihood of the contract extending its fall towards ₹910 and ₹900.

The downside pressure will ease only if the contract breaks above ₹950 decisively. Such a break can trigger a relief rally to ₹970 or ₹990. However, the price action on the daily chart suggests that an up-move breaking above ₹950 is unlikely. Any intermediate bounce towards ₹950 is likely to find fresh sellers coming into the market.

Trading strategy

Short-term traders with a high-risk appetite can go short at current levels and at ₹949. Stop-loss can be placed at ₹965 for the target of ₹905. Revise the stop-loss lower to ₹937 as soon as the contract moves down to ₹931.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

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